Government contracting is in the news again but how will we know if it is improving? Yesterday’s National Audit Office (NAO) report, Transforming Contract Management, added to the mass of reports highlighting deep-rooted problems in government’s management of private and voluntary sector suppliers. Its recommendations echo previous NAO and Institute for Government reports.
more attention on ongoing oversight of contracts rather than just signing deals
greater transparency of and clearer accountability for success and failures
and more attention to stimulating competition for contracts, so that government isn’t left with a poor selection of providers in certain service areas.
Some of the most interesting insights in the report relate to the NAO’s detailed look at 73 central government contracts. They looked at:
whether there was adequate senior oversight of contracts (“planning and governance”)
whether contract managers had the right skills (“people”)
whether contract managers were working well with colleagues across the department (“administration”)
whether payments and incentives seemed sensible (“payments and incentives”)
whether data on performance was reliable (“managing performance”)
whether there was proper risk management (“risk”)
whether change processes worked (“contract development”) and relationship with suppliers (“managing relationships”).
We shouldn’t expect perfection on these areas but the scale of problems found by the NAO is worrying – if not surprising. On every single dimension of contract management, at least half the contracts had what the NAO described as “issues” (see below).
The scale of the challenge, as the NAO points out, is known within government – and departments and the Cabinet Office’s Crown Commercial Service are trying to address the problems. Focus is certainly essential, as yesterday’s news stories also highlight that the slow but sure shift towards greater reliance on outsourced service provision is continuing in the NHS and many other areas.
But there are still areas where progress needs to be faster. One of these – highlighted by the NAO – is transparency to the public. The NAO’s assessment of how well government is managing contracts relies on private information that only they can access. It involves detailed work and takes time because government departments rarely produce any data on how they manage their own contracts. The assessment also focuses on process rather than outcomes. We can reasonably assume that the failings the NAO found matter but it is not clear how much.
The public care most about whether outsourced services deliver good services and outcomes and provide taxpayers with value for money – so what is needed, as well as exercises like the NAO’s, is ongoing assessment and publication of costs and performance available for public scrutiny. Without such transparency, it will be impossible for government to reassure the public that their efforts to address these serious problems are actually making a difference – and both government and suppliers will struggle to overcome the considerable public scepticism about the value of outsourcing.
Transparency of basic information the public care about remains the exception rather than the rule – as our recent Whitehall Monitor report makes clear. Yet the reasons for this appear to be less to do with principled and reasoned objections to publishing and more due to custom. When contracts are drawn up bigger issues are usually debated (such as who swallows various financial liabilities) so little thought is devoted to the benefits and costs of transparency. And when time is tight, the default practice is blanket non-disclosure, not least because that is the way contracts have been drafted historically.
This is why the Institute is working with the Confederation of British Industry and others to identify ways that information on the costs of contracted out services and details of their performance can be routinely published. An obvious solution we are considering is whether a new standard clause can be inserted into all contracts, ensuring that the basic information the public care about (and can understand) is provided for all contracted out services. The idea is that such a clause, supported by industry and civil society, would remove excuses for lack of transparency and make it much easier to create consistent information the public can grasp. Until such an approach is adopted, there is a risk that the drive to improve practice and rebuild public trust will fail.
